Indochina falling under Russia's influence again

01.04.2013

Russia is returning to Indochina not as a seller of weapons, but by means of investment in these countries by increasing tourism, developing small and medium business and buying real estate. Growing wealth of the Russians, warm climate, and the decline of interest in the dangerous Middle East sector has led to a reorientation of their interest towards Thailand, Vietnam and Laos.

Thai newspaper Bangkok Post wrote that "the Russians are coming" not with weapons but with pockets full of dollars. According to the paper, it is tourism, and not large business that plays a crucial role in the struggle for geopolitical influence in Indochina today. Indeed, in Vietnam, for example, the income of the entire tourism industry in the past year amounted to $35 billion, and the construction of the first nuclear plant in the country with the help of Russian investments is estimated at $10 billion.

Last year, 175,000 tourists from Russia visited Vietnam, which is 1.7 times more than in 2011. 1.3 million Russians traveled to Thailand, which is 25 percent more than in 2011. In this country the share of Russians is the largest among tourists from Europe. Laos has demonstrated a 30 percent increase - up to 7,000 in 2011, compared with the previous year, Bangkok Post quoted the data from local departments and ministries of Tourism.

Particularly impressive is the development of the Vietnamese direction, especially given that the number of European travelers has been steadily decreasing, for example, last year there were 69 percent fewer tourists from Germany. An important role here was played by a dramatic improvement in the relations between Russia and Vietnam, including in the military-technical aspect of cooperation. The recent visit of Defense Minister Sergei Shoigu began with a visit to the city of Cam Ranh, a former Soviet military base that Vietnam is ready to provide for maintenance of the Russian ships.

Cam Ranh today is a major tourist center. In particular, a new passenger terminal was built in the military airport, which secured it the status of an international airport. This gave an impetus to the socio-economic development of the region, and helped to increase the flow of foreign tourists visiting popular beach resorts of central Vietnam. "Vietnam Airlines" announced that in order to attract a larger number of tourists from Russia, they will start a weekly direct flight to Moscow from Cam Ranh on April 5th. The country is preparing to accept 3.5 million Russian tourists annually by 2020, that is, it is going to surpass the volume of tourists in Thailand.

Given that the average Russian tourist spends about $1,400 in 10 days in Indochina, the income from Russian tourism in Vietnam in 2020 will amount to approximately $5 billion a year. Vietnam is not the only country that can count money. This year, for the first time Laos took part in the International Travel Fair in Moscow to promote its tourist destination and fully involve the Russians. The country has opened a representative tourism office in Moscow and the Russian Federation signed a "Joint Action Program for 2012-2014 in the field of tourism" with the country.

Thailand is preparing for targeted hosting of tourists from Russia. "The flow of tourists from Russia, India and China is growing rapidly, and this is a long-term trend," Krailuck Asawachatroj, chief financial officer of the hotel chain Erawan, told Bangkok Post. "Economic growth in these countries has increased the purchasing power of their citizens, and to spend the money they began travelling abroad," said the director. It should be noted that all of these countries abolished visas for Russian tourists.

Tourists often turn into business people and buy real estate. The growth of living standards in China makes Indochina countries attractive to business because labor costs are lower. In early 2011, according to the American Association of Foreign Investors in Real Estate (AFIRE), Vietnam has become the best country in the world for real estate investment. The country allows enterprises with 100 percent foreign capital. The service industry and production of consumer goods are entirely in private hands. According to a study of the international auditing company Grant Thornton, hotel business is one of the most profitable in Vietnam. Russians are treated well in Vietnam, and Russian investors are well loved. Moreover, Vietnamese complain that there are not enough of them.

In Thailand, according to real estate agency Knight Frank, Russian and Chinese "are buying Phuket", primarily housing of medium and luxury class. According to local experts, each year Thailand receives over $1 billion in Russian private investment, the Russians are a strong competition to local firms in the tourism industry, although it is not welcomed by the local entrepreneurs. Russian immigrants, including those who have expired visas, are accused of taking jobs from local residents. The service sector workers, including guides, masseurs and taxi drivers, are not pleased with the Russians. However, it shows the breadth of the movement called "the Russians are coming," and that business is much more effective in promoting Russia than weapons.

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